The Heterogeneous Market Dynamics and New Product Success in the Web 2.0 Era: An Electronic Marketing Orientation Perspective

New product development is a major strategic activity for many companies; however, it is one of the most complex activities. Peres et al. (2010) investigated the effect of innovation diffusion on new product growth and found that consumer network effects via social network and product network externalities have profound effects on new product diffusion. The study adds to the current research on new product development by exploring the interaction effect of Electronic marketing orientation (EMO), innovation and network externalities effects which most of the companies have not put in their agenda yet due to strategic and technological limitation.

The most fundamental transformation recently happening in business is the diffusion of E-business practice. EMO, E-market orientation (Shaltoni and West 2010; Fazlzadeh and Nezhad 2010) or E marketing (Tsiotsou and Vlachopoulou 2011; Asikhia 2009) is a new concept which reflects a transformation of marketing activities from the traditional brick-and-mortar era to the web 2.0 era. Companies use E-marketing as the main vehicle to engage in customer relationship management, promotion, preannouncement, and to deliver superior value to customers. E-marketing also helps enhance channel relationships (Sultan and Rohm 2004) and gain competitive advantage. Empirical evidence supports the adoption of the internet to perform business transactional activities, e.g. ordering, selling, and payment are positively associated with superior performance (Drennan and McColl-Kennedy 2003). We suggest that companies, who engage in strategic innovation, take advantage of EMO strategy, and build networking with other partners by harnessing power of network externalities, are likely to achieve new product success.

Most theoretical research has examined the role of strategic orientation on new product development, while strategic orientation is difficult for small companies to mimic. In comparison, EMO addresses the new dynamic marketing strategy which focuses on value creation and engagement instead of profit maximization. This strategy has been proved to be easy for small companies to duplicate. The study extends Kotler and Zaltman (1971)’s social marketing philosophy, and Vargo and Lusch (2008)’s Service Dominant Logic (SD). We argue that in a networked economy, instead of pushing products to consumers, managers require a new EMO mindset to integrate electronic media, virtual reality, online interaction, word of mouth communication, and consumer co-creation, and eventually to create value for the firm, customers, and the society.